Sell House with Back Taxes Indiana
How to Sell a House with Back Taxes in Indiana
Delinquent property taxes in Indiana can lead to a tax sale and eventual loss of your home. But you can sell a home with back taxes — the taxes are paid from the sale proceeds at closing. This guide explains exactly how the process works and what your options are.
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Find Out Exactly How Much You Owe
Contact the Marion County Treasurer's Office to get the exact amount of delinquent taxes, penalties, and interest owed. You can also look up your property tax status online at the Marion County Assessor's website. Get the payoff amount in writing — tax balances change daily as interest accrues.
Understand the Indiana Tax Sale Timeline
Indiana holds annual tax sales for properties with delinquent taxes. Properties with taxes unpaid for 15 months or more are eligible for the tax sale. At the tax sale, investors purchase tax liens on the property. If the lien is not redeemed within the redemption period (typically 1 year), the investor can petition for a tax deed and take ownership of the property.
Determine If a Tax Lien Has Already Been Sold
Check with the Marion County Treasurer to determine if a tax lien has already been sold on your property. If it has, you have a limited redemption period to pay off the lien before the investor can petition for a tax deed. The redemption amount includes the original lien amount plus interest (up to 10% per 6-month period in Indiana).
Calculate Your Equity After Taxes Are Paid
Determine your home's current market value and subtract the mortgage balance, delinquent taxes, and any other liens. If the result is positive, you have equity and can sell the home, pay off all debts at closing, and walk away with the remainder. If the result is negative, you may need to pursue a short sale or other options.
Sell the Home — Taxes Are Paid at Closing
When you sell the home, the title company pays off all liens — including delinquent taxes — from the sale proceeds at closing. You don't need to pay the taxes before selling. The title company handles the payoff directly with the Marion County Treasurer. You receive the net proceeds after all debts are paid.
Work with a Cash Buyer for the Fastest Resolution
Cash buyers like Bartolini Cash Buyers are experienced with tax lien situations and can close quickly — often in 7–14 days. We work directly with the Marion County Treasurer and any tax lien holders to ensure all taxes are paid at closing. A fast sale stops the tax sale clock and resolves the situation cleanly.
Set Up a Payment Plan If You're Keeping the Home
If you want to keep the home, contact the Marion County Treasurer about a payment plan for delinquent taxes. Indiana law allows property owners to enter into payment agreements to avoid tax sale. You must stay current on future taxes while paying off the arrears. Contact the Treasurer's Office immediately — don't wait until the tax sale.
Indiana Tax Sale Process — What You Need to Know
Indiana holds annual tax sales in the fall for properties with delinquent taxes. Properties with taxes unpaid for 15 months or more are eligible. The Marion County tax sale is typically held in October. Properties are advertised in local newspapers before the sale.
At the tax sale, investors purchase tax liens — not the property itself. The investor pays the delinquent taxes and receives a tax lien certificate. The property owner then has a redemption period (typically 1 year) to pay off the lien plus interest. If the lien is not redeemed, the investor can petition the court for a tax deed.
The tax deed process in Indiana requires court approval and takes several months after the redemption period expires. This means property owners have significant time to act — but that time is not unlimited. If you receive notice that your property has been sold at a tax sale, act immediately.
How Back Taxes Affect Your Home Sale
Delinquent property taxes are a lien on your property — they must be paid before or at closing. The title company conducts a title search that identifies all liens, including tax liens. The title company then pays off all liens from the sale proceeds before distributing the remainder to you.
If a tax lien has been sold to an investor, the redemption amount (original lien plus interest) must also be paid at closing. The title company contacts the lien holder to get the payoff amount and pays it directly. You don't need to negotiate with the lien holder yourself.
The key question is whether you have enough equity to cover all debts — mortgage, taxes, liens, and closing costs — and still have something left over. If you do, a standard sale works. If not, you may need to pursue a short sale or negotiate with creditors.
Marion County Property Tax Resources
The Marion County Treasurer's Office handles property tax collection and tax sales. You can look up your property tax status, get payoff amounts, and apply for payment plans at the Marion County Treasurer's website or by calling their office. The Treasurer's Office can also tell you if your property has been sold at a tax sale and what the redemption amount is.
The Marion County Assessor's Office handles property assessments and can provide information about your property's assessed value. If you believe your assessment is too high (which can result in higher taxes), you can appeal the assessment through the Indiana Board of Tax Review.
Indiana also has a Circuit Breaker property tax cap that limits property taxes to a percentage of assessed value (1% for homesteads, 2% for other residential, 3% for commercial). If your taxes exceed the cap, you may be entitled to a credit. Contact the Assessor's Office to verify you're receiving all applicable credits and exemptions.
Selling When You Owe More Than the Home Is Worth
If your mortgage balance plus delinquent taxes plus other liens exceeds the home's current market value, a standard sale won't cover all your debts. In this situation, you have several options: short sale (lender agrees to accept less than the full mortgage balance), deed in lieu of foreclosure, or bankruptcy.
A short sale with tax liens is more complex than a standard short sale — you need both the mortgage lender and the tax authorities to agree to accept less than the full amount owed. This is possible but requires experienced negotiation. A HUD-approved housing counselor or real estate attorney can help.
In some cases, the Indiana Department of Local Government Finance or the Marion County Treasurer may agree to a partial payment or payment plan as part of a short sale. Contact them directly to discuss your options.
Preventing Future Tax Delinquency
If you're keeping the home, set up automatic payment for property taxes to prevent future delinquency. Marion County offers online payment options and can set up automatic withdrawals. Many mortgage servicers also offer escrow accounts that collect property taxes monthly and pay them when due — ask your servicer about this option.
Apply for all applicable property tax exemptions and credits. Indiana offers a homestead deduction for primary residences, a mortgage deduction, a senior citizen deduction, a disabled veteran deduction, and other credits. These can significantly reduce your annual tax bill. Contact the Marion County Assessor's Office to verify you're receiving all applicable benefits.
If you're facing a temporary hardship that's causing tax delinquency, contact the Marion County Treasurer immediately about a payment plan. Indiana law allows payment agreements for delinquent taxes, and the Treasurer's Office would rather work with you than go through the tax sale process.
Back Taxes Threatening Your Home? Act Now.
A fast cash sale pays off your taxes at closing and stops the tax sale clock. Call (317) 495-3440 for a same-day cash offer.
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